The Australian government will soon be able to torpedo deals that states and universities strike with foreign governments.
Victoria's Belt and Road Initiative pact with China could be the first casualty.
Scott Morrison says the changes are about protecting Australia's national security and sovereignty.
Asked if China could see the new rules as another poke in the eye, the prime minister said Australia made decisions based on its own needs and interests.
He would not say how soon the Commonwealth intended to swing the axe through the Belt and Road pact.
"It will go through the normal processes set out for analysis of all the various agreements impacted and the foreign minister will make a determination in good time," Mr Morrison told reporters on Thursday.
